Debate over shipping and food aid heats up

Thursday, April 25, 2013

The debate over reform of U.S. food-aid programs heated up yesterday with a leading organization of U.S.-flag shipowners saying a proposal by the Obama administration to allow more purchasing of food abroad and eliminating requirements that it be carried on U.S. merchant ships would “dismantle an effective tool of American diplomacy.”James L. Henry, chairman of USA Maritime, said in a statement “so-called food aid reformers point to U.S. ocean carriers as the primary example of wasteful spending in the current program, but they do so without regard to the facts. Claims that U.S. ocean carriers have a captive customer and inexplicably raise prices for food aid delivery are false.”
He said “the percentage of food aid budgets consumed by ocean freight has fallen 27 percent in recent years, and the cost of transporting P.L. 480 food aid on American commercial ships has decreased 22 percent for packaged products since 2009. A comparison of U.S.- and foreign-flagged ocean transportation found in 2008 that foreign vessels were 7.8 percent less expensive, far less than claimed by food aid reformers.”
Testifying at a hearing before the Senate on Wednesday, Rajiv Shah, administrator for the U.S. Agency for International Development, said the current P.L. 480 Title II, or Food for Peace program, “limits our ability to use the appropriate tools for each humanitarian situation—tools we know will help people faster and at a lesser cost.”
He explained that giving the agency the ability to buy more food locally “can speed the arrival of aid by as many as 14 weeks—making up precious time when every day can mean the difference between life and death. It can also cost much less—as much as 50 percent less for cereals alone. In complex environments such as Syria and Somalia, which are increasingly the kind of crises where we need to provide assistance, these more flexible tools are invaluable.”
Shah said the president’s food aid reform package “will enable us to feed 2 to 4 million additional people each year.”
USAID said the food aid reform proposal guarantees that in 2014 no less than 55
percent of the requested $1.4 billion in total funding for emergency
food assistance in international disaster assistance will be used for the purchase, transport, and
related costs of U.S. commodities.
Also on Wednesday Rep. Elijah E. Cummings, D-Md., and Scott Rigell, R-Va., introduced (H.R. 1678) Saving Essential American Sailors (SEAS) Act, a bill to repeal Section 100124 of the MAP-21 legislation which reduced from 75 percent to 50 percent the amount of U.S. food aid required to be carried on U.S.-flagged vessels.
"The senseless cuts made to the cargo preference program in MAP-21 dealt another blow to an already battered U.S. merchant marine,” Cummings said. “It is essential that these cuts be reversed and that we begin implementing policies that will strengthen our merchant marine by increasing the cargoes carried on U.S.-flagged vessels.”
Rigell, who represents part of the Hampton Roads area, said “we should not have to depend on foreign owned vessels to deliver cargo to our troops overseas. This legislation will ensure we keep Americans employed while defending the good men and women who are defending our freedom around the world.”
The lawmakers said the Maritime Administration has estimated the enactment of Section 100124 could cause the U.S.-flagged fleet to lose as much as $90 million in annual revenues and could drive additional vessels away from the U.S. flag.
They noted in 1975 there were more than 850 ocean-going ships under the U.S. flag. At the end of 2012, there were 109 U.S.-flagged vessels in the foreign trade.
Henry said “food aid reformers have twisted the truth about U.S. ocean shipping, forgotten our history, and neglected economic effects at home. Changing the food aid system will weaken the U.S. Merchant Marine, our national security and diplomatic effectiveness, and it will undermine the supply chain that delivers U.S. produced food aid worldwide.”
In a discussion of proposed reforms to food aid on PBS Newshour Wednesday evening, former USAID Administrator Andrew Natsios noted the Bush administration supported a similar reform, allowing 25 percent of Title II to be used under Food for Peace for local purchase of food aid.
“This is not a partisan issue. If President Obama and President Bush both support the same reform, you have to ask the question, who's opposed to it? Special interest groups are opposed to it. They killed the legislation then and they're trying to kill it now,” Natsios said.
When Ellen Levinson of the Alliance for Global Food Security, who was also on the TV program, was asked about the cost of U.S.-flag shipping she said overland transportation was the greatest cost and “ccean freight is about 12 percent at most.”
But Natsios shot back, saying “Ocean freight is not 12 percent. It's 20 percent of the cost. And there's an additional cost to go overland.” - Chris Dupin